The Gangs of New York by Herbert Asbury 368pp, Thunder's Mouth Press, £9.41

In the month of the snowy moon, during the reign of the Munsee chief Penhawitz, the Dutch claimed to have given trade goods worth 60 guilders to the Munsees on the off-shore isle of Manhates. In the Munsee narrative, the Dutch, who had already fatally infected the Delaware nations, only paid rent for use of the island for hunting and planting, since all sane people agreed that no man ever owns any land, not even that in which he lies buried. The Dutch did not regard the transaction of November 1626 that way; they had bought title to Manhattan in perpetuity to farm corn, raise pigs and fortify the port of New Amsterdam.

These twin myths figure only passingly in Unearthing Gotham, about the archaeology of New York, aka New Amsterdam, probably because there is little chance of recovering whatever it was the Munsees got for their gross loss: a brass mouth harp, maybe, or brandywine. Many comparable fragments have been sifted out of the substrata, though, all most informative about the Manhattan past. They include evidence of its first speculative money business, sandstone abraders for smoothing wampum beads from whelk and clam shells. These date from that era when wampum, which had been a sacred commodity to Native Americans, was degraded by the Dutch into common currency.

The Munsees, as this sly, grave book points out, accessed the world economy by making money, either to exchange for copper kettles and stockings, or in response to Dutch demands for tribute; but they never could handcraft enough wampum to meet demand, and by 1700 - after the Dutch had ceded supremacy to the British - colonial women, especially farmers' wives, lathe-turned beads in New Jersey factories.

That wasn't the only colonial use of shell, as the chapter on back yards explains. In yards behind houses, developers sank loos of quality, deep pits sided with barrels encased in impermeable clay; shells were strewn on their earth bases for their alkalinity to neutralise uric acid as it leached into soil.

As with many other finds inventoried here, the well-built bog established a New York I had never before contemplated. When they were decommissioned, their shafts were landfilled with discarded dreck from which researchers now reconstruct social histories. Foren-sically examined privy debris from a disorderly house of the 1840s established that its ladies would not have needed to queue for the outhouse, since 37 chamber pots were unearthed, along with three infant skeletons (two dead after birth, one of a foetus) and shards of fashionable glass bird feeders.

It is good to be familiar with this subterranean material before moving up to the imagined city in The Gangs of New York , which Herbert Asbury typed in the 1920s in a flat, florid prose, embellishing a century's oral history. As he told it, serious sin only arrived with the Irish from the 1820s on. They swarmed into the clapped-up houses of Five Points, a scarcely drained marsh beyond the wall, and congregated in the entertainment district around Bowery theatres and dens; the poorest sank to ruinous tenements - manmade wildernesses more feral than the Munsees had ever known under the snowy moon.

Asbury reviled these, but was more ambivalent about the origins of gangs among blue-collar young Irishmen surging with testosterone, which they blew off public-spiritedly as firemen in the all-volunteer force, turning out with their company engines, called Shad Belly or Bean Soup, only to lock into such violent fights with rival companies that the blazes burnt unchecked. These forces melded into huge gangs - the Bowery B'hoys, the Whyos, the Dead Rabbits, the Plug Uglies (from padded leather hats worn as helmets) - later used by political bosses as paid election thugs. They also spontaneously erupted: the Manhattan draft riots of the civil war, nominally against conscription but actually a protest against job competition from freed negroes, were a genuine revolution that left New York sacked and in flames.

After the civil war, boyo roughnecks were displaced by professional mobs and hired hitmen (Piker Ryan's price list: "ear chawed off $2, stab $25, doing the big job, $100 and up"). Asbury outlined their careers as exemplars of entrepreneurship, in what was meant as a neutral tone, but reads as awed, like Fortune reporting on Enron CEOs c1998.

Some bad behaviour was cultural (mail shirts worn by tong hatchetmen or barrels used as body bags by Sicilians), but there never had been anywhere before New York with such varied villainry nor the social and technical invention to serve it.

Asbury's stories are extraordinary: Marm Mandelbaum the fence, presiding as social diva of Hackensack, New Jersey, until a guest recognised over dinner the stolen emerald ring on the old predator's finger! The Lady Gophers gang, led by Battle Annie, queen of Hell's Kitchen, whose innovation was to hire out women warriors to both sides in industrial disputes! Ah Hoon the Cantonese comic, threatened with death for satire, shot while under armed guard in a safe house by a hit man who dropped from the roof; Hoochy Coochy Mary on the floor below found the body.

They read like movie scripts, which they should, since, as James Sanders writes in Celluloid Skyline, the motion picture industry was invented in New York, and movies continuously reinvented the city. The close-ups and cross-cutting that made plotted films possible were developed there from vaudeville and ethnic theatre, and used to tell New York stories.

There are eight million stories in the cinematic city, on which Sanders has done a lifetime's research, illustrating them not only with perfect stills - Audrey Hepburn on the sidewalk of East 78th Street in Breakfast at Tiffany's, the trees in leaf, a definitively NY moment 40 years ago that still seems to be a promise about the future - but with a revelatory choice from archives of reference photographs taken in NY for Hollywood studios. The space-dependent film business transferred to California to escape patents law, darkness and urban density. Yet the biggest permanent studio sets of plaster and lath standing surreally under a Pacific sky in a Burbank back lot were always of New York streets, while stacked 40 foot high in the scenery lofts were gigantic skyscraper backdrops (for the studio NY, writes Sanders, was overwhelmingly vertical - "every scene in a penthouse, in a rooftop nightclub, every window looking on to a glittering view of towers"). At the heart of Sanders's love of both New York and the movies is their worship of each other.

Among Sanders's best sequences ("sequence" because his ideas are communicated in movie terms) is his analysis of the topography of Hoboken in Elia Kazan's On the Waterfront. Kazan, writes Sanders, transformed it "into a series of tiers, each charged with narrative meaning", from a boat house pressganged to serve as the HQ of the union heavies, up through the stevedore waterfront, through a town square composited from blocks in the escarpment-top city, to the zenith of redemption, a pigeon-loft on a tenement roof.

The story that haunts me most is from Unearthing Gotham, and is as yet unfilmed. (It should be.) In 1916, a subway tunnel was excavated at Greenwich Street, along the 17th-century shoreline. Workmen found half a ship - a charred keel and ribs. She was almost certainly the Tyger, burned in 1613 while trapped in ice, stranding her Dutch crew on Manhates; they were the first Europeans to overwinter, fed by the Munsees under several snowy moons. Before a building project tore up the site in 1968, an archaeological team went in to locate her other half, but not a splinter showed. The project was, of course, the World Trade Centre.